Where next for Windows Phones? Probably nowhere

Ian Betteridge January 29, 2016

There’s an old joke, probably dating back to Roman times, which goes like this: “Never kick a man when he’s down – he may get up.” Following that advice would be the only possible reason right now not to write that Windows Phones are dead and buried, and that Microsoft ought to just quietly forget about them.

Where next for Windows Phones? Probably nowhere

To recap, in its Q2 2016 results, Microsoft sold just 4.5m Lumia phones, compared to 10.5m in the same quarter last year. That’s a huge decline in a market that is still growing, even if growth is slowing. As The Verge’s Tom Warren astutely points out, this means Microsoft has little more than a 1.1% share of the smartphone market. Moreover, unless Microsoft can pull some heavyweight rabbits out of Satya Nadella’s hat, that’s only going to decline further as the market continues to grow.

The problem for Windows 10 Mobile is that it’s just not core to Microsoft’s business, and everyone – especially within Microsoft – knows this. When the iPhone doesn’t sell double-digit percentages more year-on-year, the “Apple is doomed” rhetoric comes out in force and the company’s share price drops. That’s because iPhone is 60% of Apple’s revenue (more if you consider the associated services and “halo effect” it gets from a market-leading phone). For Microsoft, Windows Phone devices represent a drop in the ocean. If Microsoft announced tomorrow that it wasn’t going to produce any more Windows phones, its share price would probably go up.

Windows Phone fans – and there are quite a few, and they’re usually quite loud – will point out that it’s still very early days for Windows 10 Mobile. They will say that the Universal app approach, which lets developers create a single application capable of running across all Windows 10 devices from phone to Xbox, hasn’t really kicked into gear yet. And they’ll point to Continuum, which lets you plug your phone into a monitor and keyboard and use it as a PC – the “one device to rule them all” dream finally come to life.

None of this, though, is enough to save Windows on phones. Yes, it is early days for Windows 10 on mobile – but the signs are not promising. Reviews of Windows 10 Mobile have largely been lukewarm at best.

The Universal app strategy isn’t going to make a difference either. Most new business applications are developed for the web, not for Windows, and if a native app version follows at all, it’ll be iOS and Android that get developed first. Yes, you could develop a Windows app and reach all those Windows desktop users – but you’re already reaching Windows desktop users by developing the web app, so why bother?

Continuum is good in theory, but as we found in our review of the most recent Lumias, it’s a little bit flaky in practice. And having a single device with all your data and apps on it feels like the solution to the computing problems of the 1990s, not the 2010s. All of my data, and most of my apps, already live in the cloud, which means I can access them from any device, anywhere. I’m writing this article in Google Docs (although I could equally be writing it in Word online). I can walk away from this machine, sit down at another desk or on a train and start working on the same document in seconds on my phone via the cloud. I don’t need to carry around data. It’s accessible (and far more secure) in the cloud.

Of course, Microsoft knows this. It has an excellent suite of applications that run on Windows, OS X, iOS and Android in the shape of Office. You can store all your Office documents in the cloud and access them anywhere (it doesn’t even really care if you use its cloud storage or Dropbox’s – as long as you use Office). The future of apps and data is the cloud, and single device models with clunky docks are the ideas of the past.

Given all this, why does Microsoft carry on? Partly because there’s probably a feeling that to admit that Windows doesn’t have a future on mobile would send the wrong signal about Windows itself. The smartphone is the most important and most central computing device of the next 20 years, and saying Windows has no place on it would hurt Microsoft.

It’s also an insurance policy. Were Apple and/or Google ever to try and lock Microsoft out of the mobile market by, say, refusing them access to their app stores, the company would suffer some serious pain. Just as the original aim for Google with Android was simply to stop Apple or Microsoft dominating mobile and locking out Google search, so Microsoft could see Windows 10 Mobile as a potential lifeboat in case of anti-competitive behaviour by the dominant players.

As a serious player in the mobile market, Windows is over. Microsoft may well produce some kind of “Surface Phone” as a flagship device, and it may well sell a lot better than the current Lumias (it can hardly sell worse). But it will never sell in serious volume and the mobile world will continue to be dominated by Android (in the mass market) and Apple (in the high-end market). There’s just no room for a strong third contender.

READ THIS NEXT: Microsoft financials raise doubts about the future of Windows Phone